How to Invest Your First $10,000 in Your 20s: A Step-by-Step Guide

Hi, I'm Tyler, a former financial advisor and portfolio manager. Now, I create financial content for free so you don't have to pay for it. If I were investing my first $10,000 in my 20s, here is exactly what I would do:

Step 1: Establish Your Core

I would allocate $8,000 directly to a low-cost index fund that tracks the S&P 500. This establishes a solid foundation for my investment portfolio.

Step 2: Invest in Growth

Next, I'd invest $1,000 in a growth fund that aligns with my personal values and preferences. For instance, I like tech, but you might prefer crypto or energy. Just be sure to avoid paying load fees and ensure the expense ratio is below 0.05%. If it’s not, you are probably overpaying for the service.

Step 3: Explore Individual Equities

Lastly, I would invest the remaining $1,000 across 10 individual stocks. This decision is deliberate for a couple of reasons: to gain firsthand experience of market fluctuations and to understand my own risk tolerance during stock market downturns. Being in my 20s gives me the time to recover from any mistakes.

With 80% of my investment in a core strategy, I have a stable foundation. Additionally, if I get lucky and pick a few winning stocks, I won't owe any capital gains taxes on those profits.

Utilizing a Roth IRA

Importantly, I would conduct all this investing within a Roth IRA, which is a no-brainer for tax advantages.

If you found this information helpful, like and follow, and I’ll continue to share insights to help guide you toward financial success.

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